ENERGY CONSUMPTION AND ECONOMIC GROWTH: EVIDENCE FROM FOUR DEVELOPING COUNTRIES

Gulzara Tariq, Huaping SUN, Muhammd Haris, Yusheng KONG

Abstract


The aim of this study is to investigate relationship between economic growth and energy consumption in Pakistan, India, Bangladesh and Sri Lanka by using instrumental variable regression analysis. In investigation process energy consumption, economic growth, urban population, FDI and trade data is used from 1981-2015. Several outcomes are presented in this paper, first, increase in economic growth tends to increase in energy consumption, second, these countries are energy dependent and sensitive to supply of energy shocks. Thirdly, increase in trade has negative correlation with energy consumption as it introduces the energy efficient technology. In these situations policy makers should find the ways to improve economy with efficient resources so that energy consumption will be lower. So, to improve the energy efficiency in developing countries this research provides the significant policy implications.


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